Development of New Tea Industry in Third- and Fourth-Tier Chinese Cities Under the Internet Celebrity Economy

With the inheritance of tea culture and the rapid development of the Internet celebrity economy, various new tea brands have risen rapidly in China, forming a unique new tea industry. The industry is now facing the pressure of slow growth in major cities, therefore more efforts are being made to develop the sinking markets, i.e., those in the third- to fifth-tier ones and the countryside. The present study investigates the main factors that affect the profitability of the new tea stores in Jinjiang City, Fujian Province, under the framework of the four-factor theory. It is found that the education levels of the managers, advertising spending, and the ratings on the internet of a store have significantly positive impacts on its return on equity (ROE); its spending on high-technology equipment has a negative and significant influence on ROE. These results indicate that the Internet (through online rating and advertisement) plays an important role in promoting profitability in the sinking market of the new tea industry; the educational level of managers is also a key factor in the Internet celebrity economy. The negative influence of spending on high-technology equipment may suggest that the scale of new tea stores in Jinjiang has not reached the level to utilize them for increasing profits.